DM Wenceslao set to be 2018’s 1st IPO amid volatile market
THE success of D.M. Wenceslao & Associates, Inc.’s (DMWAI) P17.89-billion initial public offering (IPO) may depend on its pricing, as appetite for the stock may be uncertain given the volatility at the local bourse.
The construction firm and property developer’s IPO is set to be the first in the Philippines so far this year.
On Friday, DMWAI secured clearance from the PSE to proceed with the issuance, where it plans to sell 679.17 million shares at P22.90 apiece, with an over-allotment option of up to 101.88 million shares.
“Appetite might be blunted given current headwinds. Pricing will be key. If they leave some money on the table for investors, investment take-up will improve,” PNB Securities, Inc. President Manuel Antonio G. Lisbona said in a text message.
The PSE index has so far dropped 18.45% from its all-time high close of 9,058.62 last Jan. 29, to 7,647.51 on May 25. The local market has been affected by rising treasury yields in the United States that have been peaking near 3%. Foreign investors have likewise been fleeing the Philippine equities market, with net foreign selling for the last eight days ballooning to as much as P1.32 billion.
In a separate message, UPCC Securities Corp. Equities Trader Aristotle D. Reyes, Jr. said there will be “enough demand” since it will be DMWAI is the first IPO in 2018.
“Retail investors will look at it as an opportunity since the market has been volatile for the past few months. For the institutional investors, I’m sure the investment bankers already have demand for it,” Mr. Reyes said in a separate message.
The share sale will give the company a public float of 20%, with a market capitalization of up to P77.765 billion.
The company is scheduled to announce the final offer price of the shares on June 7. The tentative offer period is from June 18 to 22, while the target listing on the PSE’s main board under the ticker DMW is slated for June 29.
DMWAI has engaged BPI Capital Corp. and Maybank King Eng Securities Pte. Ltd. as the joint global coordinators and bookrunners for the offer, with the latter also acting as international lead manager and underwriter.
Net proceeds of DMWAI’s issuance will be used to fund its projects in the 204-hectare Aseana City in Parañaque City. The company has lined up nine projects in the area over the next five years to ramp up its recurring income.
Of the nine projects, three will be residential developments with a total saleable floor area of 88,000 square meters ( sq. m.). This includes DMWAI’s first residential project called Pixel Residences set to be completed by October 2019.
The other six projects will be commercial areas spanning 280,000 sq.m.
DMWAI currently has seven completed properties with a total leasable floor are of 59,027 sq.m., majority of which are located in Aseana City.
While DMWAI is the first company to have its IPO approved by the exchange this year, the P17.5-billion IPO of canned fruit manufacturer Del Monte Philippines, Inc. is now pending with the PSE.
PSE President and Chief Executive Officer Ramon S. Monzon earlier said that they target to have eight IPOs this year.
Philippines AirAsia, Inc. earlier this month also expressed its intent to list its shares on the PSE before the end of the year. The lowcost Philippine carrier plans to raise more than the $250 million it has initially targeted when it scheduled to launch an IPO in 2016. —